Core Viewpoint - The company, Lao Xiang Ji, is making its fifth attempt to go public, aiming to solidify its position as a leader in the Chinese fast-food industry after multiple unsuccessful IPO attempts since 2022 [1][2][29]. Company Background - Lao Xiang Ji was founded by Shu Congxuan in 2003, who transitioned from poultry farming to the fast-food sector, believing that Chinese consumers prefer local flavors over Western fast food [4][6]. - The brand has grown to operate 1,564 stores across 58 cities, serving an average of 700,000 customers daily [12]. Financial Performance - From 2022 to 2024, Lao Xiang Ji's revenue increased by nearly 1.7 billion RMB, but the growth rate dropped from 24.8% to 11.3%, with net profit growth plummeting from 49% to 9% [13]. - As of April 2025, the company faced significant financial challenges, with 655 million RMB in current liabilities and only 572 million RMB in cash, indicating difficulties in meeting short-term obligations [15]. Expansion Strategy - The company plans to raise 1.08 billion RMB through its IPO to enhance supply chain capabilities and expand its store network [16]. - The number of franchise stores surged from 118 in 2022 to 653 by April 2025, with a strategy focused on low entry barriers for franchisees, particularly former employees [19][21]. Operational Challenges - The rapid expansion of franchise stores has led to declining average sales per store and lower profit margins, with franchise stores averaging 12,400 RMB in daily sales compared to higher figures for company-owned stores [22]. - Quality control issues have arisen, with the company facing administrative penalties for food safety violations, highlighting the challenges of maintaining standards across a growing franchise network [24][27]. Market Position and Valuation - Despite being a recognized brand in the Chinese fast-food sector, Lao Xiang Ji's recent growth slowdown and reliance on regional markets have raised concerns among investors, leading to a potential valuation drop from 18 billion RMB in 2021 to 8.5 billion RMB [29]. - The company’s challenges reflect broader issues within the Chinese fast-food industry, emphasizing the need for a balance between growth and quality [31].